What is the Memory-Of-Price Strategy?

A memory-of-price strategy is a trading strategy in which double top and double bottom resistance points influence future prices of products. According to this strategy, when the resistance points are broken, market prices are influenced. A double top is a term that describes two consecutive or successive increases to a price level while a double bottom refers to two equal reversal in price. A double is otherwise called a resistance price and a double bottom is called a support price.

How Does the Memory-Of-Price Strategy Work?

This memory-of-price strategy is a trading strategy believes that a great amount of purchase and sales need to occur before prices can exceed or decrease below the double top and double bottom points. A double top occurs when two successive increases to price level and double bottom occurs when two price reversal or decline levels. The memory-of-price strategy offers a low-profit margin and higher risks to traders who use it.

An Example of a Double Top Pattern

A double top is a chart pattern that indicates two consecutive peaks in price, despite that this looks positive, it signals a decline in price. Once prices have reached a peak in a successive manner, double bottom occurs, this is when prices come back to the floor level. The floor level is inevitable because when the value of a product or asset is no longer increasing in value, prices cannot remain at the peak, they have to come back to the floor level.